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March 29, 2017

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Jake's car needs repairs but he is short of cash. A payday loan company charges a fee of 46 for a two week loan of 250. This is equivalent to a discounted loan with proceeds of 250 and a loan amount of 296. What is the per annum interest rate?

  • Mathematics - ,

    296 = 250 [1 + (I/100)/26]
    where I is the interest rate in %

    296/250 = 1.184 = [1 + (I/100)*(1/26)]

    I/2600 = 0.184

    I = 478%

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